SURESH G. PATEL, MUMBAI V. ASST CIT CEN CIR 22, MUMBAI

ITA 4025/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88520 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 04-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 20-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S PADMAJA DR
• Assessee Lawyers: K B DESAI
• Keywords: Search and seizure
• Section: 2; 153A

Judgement Text

, , , , E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . , ! '# ! '# ! '# ! '#, ,, , $ $ $ $ BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI AMIT SHUK LA, JM . / ITA NO. 4024 & 4025/MUM/2013 ( & ' (' / ASSESSMENT YEARS : 200405 & 2006-07 ) M/S. SURESH G. PATEL, 10, MITHILA SHOPPING CENTRE, V.M. ROAD, JUHU SCHEME, VILE PARLE (W), MUMBAI -400049 .. )* / APPELLANT & V/S ACIT CEN - 22 R.NO.465, AAYAKAR BHAVAN, M.K. RD. MUMBAI 400020 .... +,)* / RESPONDENT ) . / PERMANENT ACCOUNT NUMBER AAJPP5811H & '.! / 0 / ASSESSEE BY : SHRI K.B. DESAI (AR) 1 / 0 / REVENUE BY : SMT. S. PADMAJA (DR) & / ! / DATE OF HEARING 04.03.2015 ' 23( / ! / DATE OF ORDER 04.03.2015 ' ' ' ' / ORDER PER BENCH; THE AFORESAID APPEALS HAVE BEEN FILED BY THE ASSESSE E, AGAINST SEPARATE IMPUGNED ORDER OF EVEN DATE, 15.02.2013 PA SSED BY THE CIT(A)-39, MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASS ED U/S.143(3) M/S. SURESH G. PATEL 2 READ WITH SECTION 153A FOR THE ASSESSMENT YEARS 2004-0 5 AND 2006- 07. THE COMMON ISSUE INVOLVED IN BOTH THE APPEAL REL ATES TO DISALLOWANCE OF FOREIGN TRAVELING EXPENSES OF RS. 4 ,49,240/- MADE IN ASSESSMENT YEAR 2004-05 AND RS.2,99106/- FOR THE A SSESSMENT YEAR 2006-07. 2. THE BRIEF FACTS OF THE CASE ARE THAT, A SEARCH AN D SEIZURE ACTION U/S.132 (1) WAS CONDUCTED ON 16.11.2009 IN THE CASE OF M/S. M.R. CONSTRUCTION AND M/S. OPTION DEVELOPERS & BUILDERS. THE ASSESSEE WAS ALSO COVERED UNDER SUCH SEARCH AND SEIZURE ACTION. THE ASSESSEE WAS DIRECTOR IN M/S. OPTION CLOTHING CO. LTD., RAJKIRAN TR ADING PVT. LTD. AND M/S. BOY LONDON CLOTHING PVT. LTD. DURING THE COURSE O F THE SEARCH & SEIZURE PROCEEDINGS, COPIES OF HIS PASSPORT WAS FOU ND AND INVETORISED. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE A SSESSEE WAS REQUIRED TO EXPLAIN THE NUMBER OF FOREIGN TRAVELS UND ERTAKEN DURING THE YEAR; AMOUNT SPENT ON EACH FOREIGN TRAVEL, FOOD A ND OTHER MISCELLANEOUS ITEMS, ETC. SINCE ASSESSEE HAD NOT SHO WN ANY EXPENSES, THE ASSESSEE VIDE LETTER DATED 19.12.2011 ESTIMATED T HE EXPENSES OF FOREIGN TRAVEL, UNDERTAKEN DURING THE RELEVANT FINANCIA L YEAR IN THE FOLLOWING MANNER; DEPARTURE DATED ARRIVAL DATE LOCATION TRAVELLED BY ESTIMATED EXP. 17.6.03 24.6.03 MUMBAI-HONG KONG- MUMBAI MYSELF 18,600 11.9.03 1.10.03 MUMBAI-HONG KONG- MYSELF 38,500 M/S. SURESH G. PATEL 3 BANGKOK-MUMBAI 17.1.04 22.1.04 MUMBAI-HONG KONG- MUMBAI MYSELF 17,860 12.2.04 17.2.04 MUMBAI-SRI LANK- MUMBAI MYSELF 16,000/- 21.3.04 6.4.04 MUMBAI-HONG KONG- BANGKOK-MUMBAI MYSELF 36,800 1,27,760 THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD OV ERALL STAYED IN HONG KONG FOR AROUND 58 DAYS INCLUDING THE DAYS O F TRAVEL. SINCE THE ASSESSEE HAS NOT GIVEN THE BREAKUP OF COST OF STA Y AND TRAVEL AND OTHER SUPPORTING DOCUMENTS, HE ESTIMATED THE EXPENSES ON ADHOC BASIS IN THE FOLLOWING MANNER. EST. AMT. SPENT ON TRAVEL TO AND FRO (FOUR TRIPS) EST. AMT. SPENT ON FOOD@1000 PER DAY STAY @ 5000 PER DAY MISC. EXP. LIKE PURCHASE AND ENTERTAINMENT TOTAL AMT. AS PER DEPT. EST. AMT. OFFERED BY ASSESSEE DIFFERENCE 22000X4 16000X1 =104000 58,000 2,90,000 1,25,000 5,77,000 1,27,760 4,49,240 3. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED THAT NOTHING INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE O F SEARCH RELATING TO FOREIGN TRAVEL, HOWEVER TO AVOID LITIGATION ESTIMATE OF EXPENDITURE ON ACCOUNT OF FOREIGN TRAVELING WAS MADE AND OFFERED FOR DISALLOWANCE. SUCH AN OFFER OF ADDITIONAL INCOME WAS RS.1,27,760/- . ALTERNATIVELY, IT WAS STATED THE ESTIMATION MADE BY THE AO IS ON MUCH HIG HER SIDE. THE ASSESSEE BEING A DIRECTOR OF THE COMPANY IS MAINLY E NGAGED IN THE GARMENT BUSINESS, THEREFORE, FOREIGN TRAVEL WAS UNDE RTAKEN FOR M/S. SURESH G. PATEL 4 BUSINESS TRIPS TO STUDY INTERNATIONAL FASHION TRENDS. TH ERE WAS NO PERSONAL ELEMENT AND ACCORDINGLY, THE ESTIMATE OF THE AO ON ACCOUNT OF ENTERTAINMENT AND MISCELLANEOUS PURCHASES IS NOT CA LLED FOR. FURTHER THE AO HAS ESTIMATED THE EXPENSES OF TICKET AND THE AMOUN T SPEND ON FOOD FOR THE RATES APPLICABLE TO ASSESSMENT YEAR 20010 -11, WHEREAS THE TRIP WAS TAKEN IN THE A.Y. 2004-05. FURTHER THE AO ES TIMATED THE ENTIRE EXPENSES AFTER CALCULATING THE NUMBER OF DAYS WH ICH INCLUDED THE DAYS OF DEPARTURE ALSO THEREFORE, OUT OF 58 DAYS THE TOTAL STAY PERIOD WAS 53 DAYS AND THEREFORE, ESTIMATION OF 5 DAYS SHOULD BE DELETED. 4. THE LEARNED CIT(A) AFTER CONSIDERING THE ENTIRE FACTS AND SUBMISSIONS OF THE ASSESSEE HELD THAT, THE ASSESSEE H AD ESTIMATED THE ADDITIONAL INCOME EXPENSES FOR THE PURPOSE OF PU RELY ON ADHOC BASIS, WITHOUT ANY MATERIAL TO SUPPORT, THEREFORE, THE AO WAS JUSTIFIED IN ESTIMATING EXPENDITURE. HOWEVER, LOOKING TO THE OVERA LL FACTS AND CIRCUMSTANCES, HE DIRECTED THE AO TO GIVE RELIEF OF 60 % ON THE ESTIMATION MADE BY THE AO. 5. BEFORE US, THE LEARNED COUNSEL SUBMITTED THAT FIRST O F ALL, THIS BEING A SEARCH CASE, NO ADHOC ADDITION CAN BE SUBMI TTED; SECONDLY, THE AO WHILE ESTIMATING THE EXPENDITURE HAS ESTIMATED AN ADHOC AMOUNT OF RS.1,25,000/- ON ENTERTAINMENT AND PERSONAL PURCHASES M/S. SURESH G. PATEL 5 WITHOUT ANY BASIS AND LASTLY, THE NUMBER OF DAYS CALCUL ATED BY HIM IS ALSO INCORRECT, AS INSTEAD OF 58 DAYS HE SHOULD HAVE TAKEN 53 DAYS. AS AN ALTERNATIVE, HE SUBMITTED THAT THE ESTIMATION MADE BY THE AO IS ON THE HIGHER SIDE. 6. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT LD. CIT(A) HAS ALREADY GIVEN SUBSTANTIAL RELIEF OF 60% AND THEREFO RE, THERE IS NO SCOPE FOR FURTHER RELIEF. THE RELIEF OF 60% GIVEN BY THE L D.CIT(A) WILL TAKE CARE OF ALL THE INFIRMITIES POINTED OUT BY THE LD. CO UNSEL. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND ALSO PERUSED IMPUGNED ORDER AND THE MATERIAL PLACED ON RECORD. IT IS AN AD MITTED FACT THAT ASSESSEE HAS UNDERTAKEN FOREIGN TRIPS FOR WHICH NO P ROPER DETAILS OR EVIDENCES HAVE BEEN PRODUCED. THE ASSESSEE HAD OFFE RED THE DISALLOWANCE AS ADDITIONAL INCOME OF RS.1,27,760/- O N ESTIMATE BASIS ONLY. SINCE THE ASSESSEE DID NOT HAVE ANY SUPPORTING DOCUMENTS FOR ARRIVING AT THE ESTIMATED FIGURE OF EXPENSES INCURRED , THE AO WAS QUITE JUSTIFIED IN ESTIMATING THE EXPENSES. THE LD. CIT(A), HAS ALREADY SCALED DOWN THE DISALLOWANCE AND HAD GRANTED SUBSTANTIAL RELI EF TO THE ASSESSEE WHICH COMES TO RS.3,46,200/-. NOW THE NET DISALLOWANCE AFTER GIVING EFFECT TO THE LD.CIT(A) ORDER, COMES TO RS.36,800/-. THE LEARNED COUNSEL HAS CONTENDED BEFORE US THAT NUMBER OF DAYS WHICH HAS BEEN CALCULATED BY THE AO SHOULD BE REDUCED TO 53 DAYS INSTEAD OF M/S. SURESH G. PATEL 6 58 DAYS AND ALSO ESTIMATION ON ACCOUNT OF MISCELLANE OUS EXPENSES LIKE PERSONAL PURCHASES AND ENTERTAINMENT OF RS.1,25,000 /- SHOULD BE REDUCED. SO FAR AS SECOND CONTENTION OF THE LD. COUNSE L THAT MISCELLANEOUS EXPENSES OF RS.1,25,000/- SHOULD BE R EDUCED, WE ARE OF THE OPINION THAT RELIEF OF 60% GIVEN BY THE CIT(A) IS SUFFICIENT TO COVER SUCH AN ESTIMATION MADE BY THE AO. HOWEVER WE AGREE WITH THE SECOND CONTENTION OF THE LEARNED COUNSEL THAT THE NUMBE R OF DAYS FOR THE PURPOSE OF ESTIMATING THE EXPENSES SHOULD BE 53 DA YS AND IF THE RATE OF ESTIMATION TAKEN BY THE AO AT RS.5,000/- PER DA Y FOR THE STAY AND RS.1,000/-PER DAY FOR THE FOOD IS TAKEN INTO ACCOU NT, THEN THERE WOULD BE FURTHER REDUCTION OF ESTIMATED OF EXPENSES. ACCORDINGLY, WE GRANT FURTHER RELIEF OF RS.30,000/- ON ACCOUNT OF F OOD AND STAY AND IN THE RESULT, OVER AND ABOVE THE RELIEF GIVEN BY THE LD . CIT(A), THERE WOULD BE FURTHER RELIEF OF RS.30,000/-. THUS, THE GR OUND RAISED BY THE ASSESSEE TREATED AS PARTLY ALLOWED. 8. SIMILARLY IN A.Y. 2006-07, THE ASSESSEE HAS OFFE RED THE ADDITIONAL INCOME ON ACCOUNT OF FOREIGN TRAVELING EXPENSES IN TH E FOLLOWING MANNER; DEPARTURE DATED ARRIVAL DATE LOCATION TRAVELLED BY ESTIMATED EXP. 26.5.05 5.6.05 MUMBAI-HONG KONG- BANGKOK-MUMBAI MYSELF 30,400 19.9.05 28.9.05 MUMBAI-HONG KONG- BANGKOK-MUMBAI MYSELF 28,733 1.12.05 8.12.05 MUMBAI-HONG KONG- BANGKOK-MUMBAI MYSELF 28,361 M/S. SURESH G. PATEL 7 16.1.2006 24.1.2006 MUMBAI-HONG KONG- BANGKOK-MUMBAI MYSELF 29,400 1,16,894 THE AO HAS ESTIMATED THE EXPENSES AFTER TAKING INTO CONSIDERATION 38 DAYS IN THE FOLLOWING MANNER:- EST. AMT. SPENT ON TRAVEL TO AND FRO (FOUR TRIPS) EST. AMT. SPENT ON FOOD@1000 PER DAY STAY @ 5000 PER DAY MISC. EXP. LIKE PURCHASE AND ENTERTAINMENT TOTAL AMT. AS PER DEPT. EST. AMT. OFFERED BY ASSESSEE DIFFERENCE 22000X4 =88,000 38,000 1,90,000 1,00,000 4,16,000 1,16,894 2,99,106 9. IN THIS YEAR ALSO LD. CIT(A) HAS GIVEN RELIEF OF 40%. AFTER EFFECT OF THE LD.CIT(A) ORDER, THE TOTAL RELIEF WORKS OUT AT RS. 1,66,400/- IN THIS YEAR ALSO THE MAIN CONTENTION OF THE LD. COUNSEL HAD B EEN THAT THE NUMBER OF DAYS SHOULD BE 34 DAYS, INSTEAD OF 38 DAYS . THUS, ON THE SIMILAR LINES AS HAS HELD IN THE APPEAL FOR THE A.Y . 2004-05, WE HOLD THAT ESTIMATION ON FOOD AND STAY SHOULD BE MADE FOR 34 DAYS AND NOT 38 DAYS. ACCORDINGLY, THE ASSESSEE WILL GET FURTHER R ELIEF OF 24,000/- OVER AND ABOVE THE RELIEF GRANTED BY THE LD. CIT(A). M/S. SURESH G. PATEL 8 10. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE TR EATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH DAY OF MARCH 2015. SD/- SD/- . D. KRUNAKARA RAO ACCOUNTANT MEMBER ! ! ! ! '# '# '# '# AMIT SHUKLA JUDICIAL MEMBER MUMBAI, 4& 4& 4& 4& DATED:04.03.2015 PATEL ' / +!5 65(! / COPY OF THE ORDER FORWARDED TO : (1) & '.! / THE ASSESSEE; (2) 1 / THE REVENUE; (3) 7() / THE CIT(A); (4) 7 / THE CIT, MUMBAI CITY CONCERNED; (5) 5:; +!& , , / THE DR, ITAT, MUMBAI; (6) ;' < / GUARD FILE. ,5! +! / TRUE COPY '& / BY ORDER = / > 1 / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI